The Money Makers

Eric Rauchway Basic Books, 305 pages, $28.99

In "The Money Makers: How Roosevelt and Keynes Ended the Depression, Defeated Fascism, and Secured a Prosperous Peace," University of California, Davis, historian Eric Rauchway looks at how FDR's economic policy was influenced by British economist John Maynard Keynes. Rauchway argues that policymakers today could learn "valuable lessons" from Roosevelt, who shook up the economic orthodoxy to rescue America from the Great Depression of the 1930s and to keep the Allies going during World War II.

The title of the book oversells it slightly. The British economist and the president were not equal in the task, nor was Keynes really Roosevelt's adviser; indeed Rauchway himself shows that they met only occasionally. Nonetheless, as an introduction to the economic debates taking place in London and Washington in the 1930s and 1940s, Rauchway's work could not be better.

Rauchway argues that Roosevelt's public works projects were radical in policy. More important, he says, in 1933 he took America off the gold standard. Despite vocal opposition by bankers, whose interest lay in preserving the gold standard, Roosevelt ensured that the money supply rose, thereby warding off deflation. Flaws and all, this work is impressive. Rauchway combines three things that you seldom see in economic-history books: sufficient attention to complexity, a solid grasp of the economics and writing that is enjoyable to read.